One of the stated aims of demonetization was to bring down the use of currency in the financial system. Currency is anonymous—it can be hoarded, used as black money, and has costs attached to it. Naturally, the government doesn’t like our unfortunate propensity to use it. Has demonetization helped us kick this habit?

Well, at the end of October 2016, just before demonetization, currency with the public was 13.77% of M3, a broad measure of money supply in the economy.

Demonetization led to a sharp plunge in this metric and currency with the public plummeted to a mere 6.55% of M3 by December 2016 as the entire nation was made to queue up to surrender their old high-denomination currency notes.

Two years later, as of 12 October 2018, the currency with the public/M3 metric stood at 12.99%. That is still well below the level at the end of October 2016. So, could we say that the whole exercise was something of a success, some gain at the end of all that pain?